c The following table prorates the overapplied overhead of 80000 to work in

C the following table prorates the overapplied

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c.The following table prorates the overapplied overhead of \$80,000 to work-in-process, finished goods, and cost of goods sold. Account Unadjusted balance Proportion Allocation of \$80,000 Adjusted balance Work-in-process \$200,000 20% \$16,000 \$184,0001Finished Goods \$300,000 30% \$24,000 \$276,000Cost of Goods Sold \$500,000 50% \$40,000 \$460,000Total \$1,000,000 100% \$80,000 \$920,000d.If the company had chosen to write off the entire \$80,000 of overapplied overhead to cost of goods sold, then income would have increased by \$80,000. Because of proration, the income only increases by \$40,000. Therefore,income would be higher under the write off approach by \$40,000 (= \$80,000 - \$40,000).
ACC 312 Fundamentals of Managerial Accounting Midterm Exam II, Spring 2012, Wednesday April 11th2012 15 QUESTION THREE (12 points)Cutting Edge, Inc. (CEI) manufactures the new wands used to draw on electronic tablets. The wand only requires one type of direct material (rubber). During March CEI sold 20,000 wands for \$19.00 each. CEI had rubber purchases of 18,500 pounds at \$1.60 per pound. The master budget input for one wand is as follows: Material 0.75 lb. of rubber at \$1.50 per pound Labor 0.50 hours at \$15 per hour CEI budgeted for 20,500 wands to be sold in March at \$18.00 each (in the master budget). For the most recent month of March, actualmaterial and labor costs incurred in making 20,000 wands sold in March were as follows: Material \$28,800 total cost (\$1.60 per pound) Labor 9,500 hours at a total cost of \$133,000 Required:Calculatethe following variances for March. Be sure to indicate F or Ufor each variance amount. Direct-Material Quantity Variance[(20,000 x .75) – 18,000] x \$1.50 = \$4,500U Direct-Material Price Variance(\$1.50 - \$1.60) x 18,500 = \$1,850 U Direct-Labor Efficiency Variance[(20,000 x .5) – 9,500] x \$15 = \$7,500 F Direct-Labor Rate VarianceActual price = \$133,000/9500 = \$14 per hour (\$15 - \$14) x 9500 = \$9,500 F Sales Price Variance(\$19 - \$18) x 20,000 = \$20,000 F Both amount and U/F must be correct. No partial.
ACC 312 Fundamentals of Managerial Accounting Midterm Exam II, Spring 2012, Wednesday April 11th2012 16 QUESTION FOUR (14 points) Bunyan Furniture manufactures custom-made wood furniture pieces. The company classifies its various jobs as either standard jobs (basic pattern) or special jobs (complex patterns). They charge customers \$2,768 for a standard job and \$5,890 for a special job. All products are sold as a job not by the piece. Of the 900 jobs they do each year, 650 are standard jobs and 250 are special jobs. Direct manufacturing labor costs an average of \$25 per hour. They currently use a single cost pool to allocate overhead. Bunyan Furniture operates at capacity and currently allocates all overhead using carving machine hours as the allocation base (traditional costing system). Bunyan Furniture has been concerned about the accuracy of its current overhead allocation methodology and is planning on implementing an activity-based costing system with five categories for assigning overhead: design, tree-cutting, set-up, carving machine operations, and painting. To see how activity-based costing would affect the costs of standard jobs and special jobs, Bunyan Furniture collected the following information for the fiscal year 2011 just ended.

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